M/S. Rayband Chemicals, Indore Vs. Cce, Indore - Court Judgment

Excerpt:
1. having carefully examined the records and heard both sides, i am taking up the appeal itself for final disposal.2. the department framed a case of clandestine removal of the excisable goods without payment of duty, against the appellants on the basis of he results of an inspection conducted by its officers in the factory and depot premises of the party on 31.03.1998. the officers seized certain quantities of paints and varnishes from the premises. it appeared to them that the appellants, an ssi unit, had crossed the exemption limit of clearance value of r. 30 lakhs prescribed under notification no. 1/93-ce dated 28.02.1993 for the period 1997-98.accordingly, the department issued a show-cause notice (scn) to the party for confiscation of the seized goods and for recovery of duty of excise on the goods cleared in excess of the aforesaid limit as also for imposing penalties on the party under the provisions of sections 11ac of the central excise act and rule 173q of the central excise rules, 1944. the scn was contested by the noticee. the jurisdictional additional commissioner of central excise, who adjudicated the dispute, ordered confiscation of the goods with option for redemption thereof on payment of fine; confirmed the demand of duty to the extent of rs. 20,607/- against the appellants on the goods cleared in excess of the limit of r. 30 lakhs and adjusted the duty paid on 06.04.1998 against the demand so confirmed; imposed on the party penalties of rs. 20,607/- and rs. 10,000/- under section 11ac and rule 173q respective; and directed the party to pay interest on the aforesaid duty amount under section 11ab of the act. aggrieved by the order of the additional commissioner, the party preferred appeal to the commissioner (appeals).they also filed an application for waiver of pre-deposit on the penalty amounts and for stay of recovery thereof under section 35f of the act.in that stay application, they inter alia, made a specific prayer for personal hearing. the prayer was, however, not granted by the lower appellate authority. the authority passed "interim stay order" dated 25.04.2000 directing the appellants to deposit the adjudged dues. it appears from the records that, upon receipt of the stay order, the appellants submitted an application seeking modification of the stay order after personal hearing. upon that application, the commissioner (appeals) fixed a hearing to 13.07.2000. the appellants then asked for an adjournment to the next day (14.07.2000). on that day too, the appellants did not present themselves before the commissioner (appeals). subsequently, the appeal was taken up by the commissioner (appeals) for final disposal, which resulted the party's appeal on the sole ground of non-compliance with the interim stay order dated 25.04.2000 without looking into the merits of the case.3. it is submitted today by ld. advocate shri a.c. upadhyay for the appellants that an amount of rs. 30,000/- had already been paid by the appellants on 06.04.1998 towards duty of excise on the goods cleared from their factory during 1997-98 in excess of the clearance limit of rs. 30 lakhs prescribed under notification no. 1/93 and that such deposit was adjusted against the demand of duty confirmed as per the order of the adjudicating authority. ld. advocate submits that, after having acknowledged satisfaction of the demand of duty, it was not open to the adjudicating authority to impose mandatory penalty (penalty equal to the amount of duty confirmed) on the party under section 11ac of the act. he, further, submits that, evenafter adjustment as above, an amount of rs. 9,393/- was still available for appropriation towards any penalty under rule 173q and, therefore, the order directing payment of the penalty of rs. 10,000/- under the rule was also unjustified. ld.advocate, therefore, submits that the appellants have a strong prima facie case for waiver of pre-deposit and stay of recovery in respect of the penalties imposed by the adjudicating authority. with regard to the proceedings of the commissioner (appeals), counsel submits that both the interim stay order and the final order of that authority are in patent violation of the principles of natural justice as no opportunity of personal hearing was granted to the appellants before passing those orders.4. ld. jdr shri swatantra kumar invites my attention to the fact that the impugned order happened to be passed on account of the fact that the opportunity of hearing on 14.07.2000 granted by the commissioner (appeals) to the appellants at the latter's own request was not taken by them. on this sole ground, according to the jdr, the appellants are not entitled to any relief in the present stay application. however, in the appeal, ld. jdr is not averse to a remand.5. the above account of the proceedings make it very clear that the proceedings of the lower appellate authority are vitiated by breach of natural justice. the party had specifically requested the commissioner (appeals) for an opportunity of personal hearing on the stay application. that request was not heeded and the interim stay order was passed by the commissioner (appeals) directing the party to deposit the amounts. upon receipt of the stay order, the party made a request for modification, whereupon, commissioner (appeals) fixed the matter for hearing to 13.07.2000. on that day, the party prayed for adjournment to the next day. however, on 14.07.2000, the party neither turned up for nearing nor placed any request for further adjournment before the commissioner (appeals). the appellant's default in this context is obvious on the face of the record. this, however, would not go to justify the subsequent action of the commissioner (appeals), who dismissed the appeal of the party without affording any opportunity of personal hearing. the impugned order is, therefore, violative of the principles of natural justice. on this basis, the matter has to go back to the lower appellate authority for fresh decision of the case on its merits in accordance with law and the principles of natural justice. i, therefore, set aside the impugned order and allow the present appeal by way of remand directing the commissioner (appeals) to dispose of the appeal before him on its merits after giving a reasonable opportunity of hearing to the appellants.6. since personal hearing was not granted on the stay application filed before the lower appellate authority and, further, since similar hearing on the modification application field before that authority could not be availed by the appellants, there will be a direction to the commissioner (appeals) to reconsider the stay application and the modification application on merits, before proceeding to dispose of the party's appeal as directed above.

Judgment:
1. Having carefully examined the records and heard both sides, I am taking up the appeal itself for final disposal.

2. The department framed a case of clandestine removal of the excisable goods without payment of duty, against the appellants on the basis of he results of an inspection conducted by its officers in the factory and depot premises of the party on 31.03.1998. The officers seized certain quantities of paints and varnishes from the premises. It appeared to them that the appellants, an SSI unit, had crossed the exemption limit of clearance value of R. 30 lakhs prescribed under Notification No. 1/93-CE dated 28.02.1993 for the period 1997-98.

Accordingly, the Department issued a show-cause notice (SCN) to the party for confiscation of the seized goods and for recovery of duty of excise on the goods cleared in excess of the aforesaid limit as also for imposing penalties on the party under the provisions of Sections 11AC of the Central Excise Act and Rule 173Q of the Central Excise Rules, 1944. The SCN was contested by the noticee. The jurisdictional Additional Commissioner of Central Excise, who adjudicated the dispute, ordered confiscation of the goods with option for redemption thereof on payment of fine; confirmed the demand of duty to the extent of Rs. 20,607/- against the appellants on the goods cleared in excess of the limit of R. 30 lakhs and adjusted the duty paid on 06.04.1998 against the demand so confirmed; imposed on the party penalties of Rs. 20,607/- and Rs. 10,000/- under Section 11AC and Rule 173Q respective; and directed the party to pay interest on the aforesaid duty amount under Section 11AB of the Act. Aggrieved by the order of the Additional Commissioner, the party preferred appeal to the Commissioner (Appeals).

They also filed an application for waiver of pre-deposit on the penalty amounts and for stay of recovery thereof under Section 35F of the Act.

In that stay application, they inter alia, made a specific prayer for personal hearing. The prayer was, however, not granted by the lower appellate authority. The authority passed "interim stay order" dated 25.04.2000 directing the appellants to deposit the adjudged dues. It appears from the records that, upon receipt of the stay order, the appellants submitted an application seeking modification of the stay order after personal hearing. Upon that application, the Commissioner (Appeals) fixed a hearing to 13.07.2000. The appellants then asked for an adjournment to the next day (14.07.2000). On that day too, the appellants did not present themselves before the Commissioner (Appeals). Subsequently, the appeal was taken up by the Commissioner (Appeals) for final disposal, which resulted the party's appeal on the sole ground of non-compliance with the interim stay order dated 25.04.2000 without looking into the merits of the case.

3. It is submitted today by ld. Advocate Shri A.C. Upadhyay for the appellants that an amount of Rs. 30,000/- had already been paid by the appellants on 06.04.1998 towards duty of excise on the goods cleared from their factory during 1997-98 in excess of the clearance limit of Rs. 30 lakhs prescribed under Notification No. 1/93 and that such deposit was adjusted against the demand of duty confirmed as per the order of the adjudicating authority. Ld. Advocate submits that, after having acknowledged satisfaction of the demand of duty, it was not open to the adjudicating authority to impose mandatory penalty (penalty equal to the amount of duty confirmed) on the party under Section 11AC of the Act. he, further, submits that, evenafter adjustment as above, an amount of Rs. 9,393/- was still available for appropriation towards any penalty under Rule 173Q and, therefore, the order directing payment of the penalty of Rs. 10,000/- under the Rule was also unjustified. Ld.

Advocate, therefore, submits that the appellants have a strong prima facie case for waiver of pre-deposit and stay of recovery in respect of the penalties imposed by the adjudicating authority. With regard to the proceedings of the Commissioner (Appeals), Counsel submits that both the interim stay order and the final order of that authority are in patent violation of the principles of natural justice as no opportunity of personal hearing was granted to the appellants before passing those orders.

4. Ld. JDR Shri Swatantra Kumar invites my attention to the fact that the impugned order happened to be passed on account of the fact that the opportunity of hearing on 14.07.2000 granted by the Commissioner (Appeals) to the appellants at the latter's own request was not taken by them. On this sole ground, according to the JDR, the appellants are not entitled to any relief in the present stay application. However, in the appeal, ld. JDR is not averse to a remand.

5. The above account of the proceedings make it very clear that the proceedings of the lower appellate authority are vitiated by breach of natural justice. The party had specifically requested the Commissioner (Appeals) for an opportunity of personal hearing on the stay application. That request was not heeded and the interim stay order was passed by the Commissioner (Appeals) directing the party to deposit the amounts. Upon receipt of the stay order, the party made a request for modification, whereupon, Commissioner (Appeals) fixed the matter for hearing to 13.07.2000. On that day, the party prayed for adjournment to the next day. However, on 14.07.2000, the party neither turned up for nearing nor placed any request for further adjournment before the Commissioner (Appeals). The appellant's default in this context is obvious on the face of the record. This, however, would not go to justify the subsequent action of the Commissioner (Appeals), who dismissed the appeal of the party without affording any opportunity of personal hearing. The impugned order is, therefore, violative of the principles of natural justice. On this basis, the matter has to go back to the lower appellate authority for fresh decision of the case on its merits in accordance with law and the principles of natural justice. I, therefore, set aside the impugned order and allow the present appeal by way of remand directing the Commissioner (Appeals) to dispose of the appeal before him on its merits after giving a reasonable opportunity of hearing to the appellants.

6. Since personal hearing was not granted on the stay application filed before the lower appellate authority and, further, since similar hearing on the modification application field before that authority could not be availed by the appellants, there will be a direction to the Commissioner (appeals) to reconsider the stay application and the modification application on merits, before proceeding to dispose of the party's appeal as directed above.